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Highlights: Competitive Grants Fund the development of affordable single-family and rental housing through direct grants of up to $500,000. The Bank contributes 10 percent of net income annually and offers one application round. In 2011, 53 applications were approved for $11 million in AHP grants. 146 applications were submitted requesting $35 million in AHP grants.

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AHP in 2011 & 2012 One competitive funding round in 2012. Applications for 2011 were due on April 15, 2011. The AHP round schedule is designed to coincide with the availability of affordable housing resources within the 5 state district. Funding of SNAP and HELP for 2011 was $2,100,000 and $1,700,000, respectively for each program.

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Eligibility Requirements Sponsor capacity: Document experience and manpower to meet objectives outlined in project description – include resumes and organizational bios; previous projects, AHP track record, etc. Evidence of Demand: Support documentation that will provide evidence your project location has a need for this type of housing and this type of family/tenant (i.e. Market Study, Appraisal, City Consolidated Plan). Site Control/Zoning: Evidence of site control and proper zoning must be provided in the application. Zoning issues must be resolved and submitted to the Bank for review by May 31, 2012.

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Single-Family Feasibility CriteriaRanges/Limits Income TargetingLess than 80% of AMI. Subsidy Pass-throughClearly demonstrated to homebuyer. Interest Rates, Fees, Points, and Other Finance Costs Not to Exceed Market Rate. Developer FeeNot to Exceed 15% of TDC. Cash BackCash Bank to Homebuyer at Closing is NOT Allowed.

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Single-Family Project Sources of Funding for pictured home in Harrison, Arkansas: USDA 502 Direct Loan for $94,500 - loans are used to help low- income individuals or households purchase homes in rural areas. Awarded a $4,500 AHP grant from FHLB Dallas.

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Multifamily Feasibility CriteriaRanges/Limits Targeting At least 20% of the units must be targeted to <50% of AMI. Debt Service Ratio 1.05 - 1.35 Vacancy Ratio Less than or equal to 7.5% (up to 10% for special needs). Replacement Reserves - Elderly new construction. $250/unit/year. - New construction $300/unit/year. Operating Expenses Less than $4,000/unit/year. Escalators – Income Expense - 1-3% - 2-4%

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CriteriaRanges/Limits Management Fee No more than 10% Gross Income Tax Credit PriceGreater than or equal to $0.60. Soft Construction CostNot to exceed 30% of TDC. Hard Cost Contingency Not to exceed 10% new/15% rehab. Developers Fee Not to exceed 15% of TDC. Rents Not to exceed 30% of AMI. Interest Rates, Fees, Points Not to exceed market rate. General Requirements, Builder Overhead and Builder Profit. 14% of Total Construction Cost Multifamily Feasibility

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Multifamily Development Austin, Texas An AHP grant assisted in the construction of The Willows, a 64-unit, housing project in Austin, TX. The project assists individuals with disabilities.

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Multifamily Development The Willows was awarded a $500,000 AHP grant. The sponsor, Mary Lee Community of Austin received $2,250,000 from Austin Housing Finance, $1,300,000 from Frost Bank and $380,000 from Private Foundations. These funds were used for the development of housing to serve persons with physical disabilities. The project was completed in August 2010.

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Multifamily Development Wilson Court 2 was awarded a $154,000 AHP grant. The sponsor, Easter Seals of Little Rock received $1,216,931 in HUD funds for a section 811 project. These funds were used for the development of housing to serve persons with mental or physical disabilities. The project was completed in February 2009.

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Projects can receive five (5) points for each of the following activities not to exceed a total of ten (10) points: Rehabilitating or converting an existing non-housing structure into housing (adaptive reuse). Rehabilitating at least 20% of the units in the project which are vacant, abandoned or foreclosed properties (not including vacant land) resulting in those properties meeting or exceeding local building codes or the International Code Council (ICC) standards. Demolishing at least 20% of the units in the project which are vacant, abandoned, or foreclosed properties (not including vacant land) and rebuilding with new construction. 100% new construction. Community Stability

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Community Stability (continued) ) Projects will receive five (5) points if: 1)The project will, within two years after the AHP application deadline, face expiring HUD Section 8 project-based rental assistance contracts, reach the end of a tax credit compliance period, or face expiring USDA-RD 515 rental assistance contracts; AND 2)The project commits to preserve ALL of the affordable rental units after the expiration of such contract or the end of the tax credit compliance period.

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2011 Income Targeting Sliding Scale based upon income groups targeted. < 50% - number of units *5 50%-60% - number of units *3 60%-80% - number of units *1 (Sum of Above)/Total # units/5 *25 Rental Projects – If at least 60% of units are targeted to < 50%, receive 25 points; otherwise, the formula above is applied.

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2011 Effective Use of Funds Sliding Scale based upon amount of AHP money requested per unit. $7,000 or less – 15 points (maximum) $7,001 - $8,000 – 14 points For every additional $1,000 requested per unit, the score declines by 1 point.

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Deed Restrictions ALL AHP Grants are subject to a deed restriction: Owner projects for 5 years Rental projects for 15 years

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Application Application is available on fhlb.com. Submit your application early to the member institution. Member approval is required by the deadline. Supporting documents must be sent to the FHLB within five business days of the application submission. Get to know your FHLB contact!

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Eligibility Requirements $1,700,000 was available for 2011. Maximum grants per member capped at $68,000. First-come, first-served. Must be first-time homebuyer. Area Median Income 80% or less. Homebuyer contribution - $500, grant is provided up to $5,000. If Member contributes an additional $350, the maximum grant increases from $5,000 to $7,000. Homebuyer education required.

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Owner-occupied rehabilitation program that targets households with a special needs member in it. Rehabilitation or modification must be necessary for structural and/or safety reasons. This is NOT a home improvement program. Proper due diligence has to be performed to ensure that the repair/modification is necessary and that the cost is reasonable. What is SNAP?

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Eligibility Requirements $2,100,000 was available for 2011. Maximum grants per member capped at $126,000. First-come, first-served. Must have a special needs household member. Area Median Income 80% or less. No Homeowner contribution, rehabilitation assistance up to $5,000. If Member contributes $350, maximum grant increases from $5,000 to $7,000.

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Partnership Grant Program Matching grant program with $225,000 available for the year 2011 Applications were accepted from August 1 through August 5, 2011 Nonprofit organization Revenue of $500,000 or less Member financial contribution from $500 up to $5,000 Multiple member contributions allowed Bank match 3:1 Selections made by lottery

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Community Investment Program (CIP) The Bank’s program designed to support the financing of affordable single and multifamily housing properties. Community Investment Program

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Favorably priced advances to increase single and multifamily housing for individuals and families. Permanent financing for the purchase, construction or rehabilitation of single and multifamily housing. No pre-set funding limit and may be used with AHP grants. Non-competitive year-round funding. Individual income qualification (115% or less of AMI). Individual income 115% or less of AMI 51% of tenants make at or below 115% of AMI Maximum spreads: - 300 basis points for owner-occupied housing projects - 400 basis points for rental development Community Investment Program (CIP)

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Advance terms from 91 days to 30 years: - Fixed or Variable Rate - Amortizing or Interest Only - Amortizing w/ Balloons - Pre-payable Options Quick response – commitment approval within 24 hours TVF required within 30 days of funding Member may fund the lesser of 15% of total assets or $200MM in CIP/EDP/DRP Advance Programs Currently offer a free 3-Month Rate Lock Community Investment Program

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$925K CIP advance with a 30yr amortization/15yr balloon structure. Member funded a tax credit multifamily project. New construction of 35 single-family homes. FHLB able to qualify the project by its tax credit status. All 35 homes will be rented to residents at or below 80% of the AMI. CIP Advance

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Letters of Credit and LOC Confirmations facilitate: Residential housing finance Community lending eligible for CIP/EDP projects Collateralize public unit deposits Letters of Credit - utilized as an alternative to purchasing securities to insure PUDs Letter of Credit Confirmations - utilized as credit support for taxable bonds; and as credit support for tax-exempt bonds where Section 149 of the IRC specifically authorizes a debt instrument to be federally guaranteed while maintaining its tax-exempt status Bank’s LOCs are AAA/Aaa-rated by Moody and S&P Terms from 1 day up to 10 years If eligible for CIP pricing: - Letters of Credit range from 8-14 basis points - Confirmations range from 20-30 basis points and an upfront fee ranging from $1,500 to $5,000 Letters of Credit & Confirmations

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About EDP Plus Grants to small businesses in underserved areas that promote economic development and create or retain jobs. Permanent financing for start-up, expansion or acquisition. The EDP Plus grant must be used in conjunction with an EDP advance; recipient contributes at least 15% equity of the total EDP advance amount. EDP Plus grant is up to 15% or $25,000 (whichever is less) of total EDP advance amount. Member institutions eligible for up to $100,000 in EDP Plus grants annually.

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Member had a local small business client in Youngsville, LA that wanted to open a new pharmacy The small business needed the funds primarily for working capital, advertising costs and equipment Member qualified for a $110M EDP advance and an EDP Plus grant of $16.5M Project qualified because 51% of the employee household incomes were at or below 80% AMI The project allowed the business to create 2 jobs Small Business – EDP Plus